Category Archives: Investing and fiduciary requirements

‘Pre-existing’ hurdles eased

By Renee Dudley
Saturday, June 4
Premium rates will drop and eligibility will get easier for South Carolinians applying for health coverage through the state’s insurance program for people with so-called “pre- existing” medical conditions, the U.S. Department of Health and Human Services announced this week.

In South Carolina, rates for the Pre-Existing Condition Insurance Plan will drop 14.7 percent, according to the announcement. Beginning in July, monthly premiums will range from $139 a month for people younger than 19 to $596 for people older than 55, according to the U.S. Department of Health and Human Services.

Also beginning in July, applicants no longer need to provide letters from insurance companies denying coverage.

They still must provide letters from health professionals, dated within a year, disclosing medical conditions or disabilities. They also still are required to show they have been without health coverage for six months and prove citizenship or legal resident status.

The Pre-Existing Condition Insurance Plan, created under the federal Affordable Care Act, was intended to provide health coverage to people with pre- existing conditions — cancer, diabetes and asthma, for example — that usually disqualify them for coverage by private insurers. The plans, available in each state, are meant to be in place until 2014 when insurers no longer will be allowed to deny coverage to people with pre-existing conditions.

To learn more

For more information, visit or call 866-717-5826.

The federal government is subsidizing the plans to the tune of $5 billion nationally over four years. About $74 million of that is set aside for South Carolina.

Currently, 18,313 individuals nationally are covered through the Pre-Existing Condition Insurance Plan. In South Carolina, 301 people were enrolled as of March 31, according to the U.S. Department of Health and Human Services.

The latest state enrollment figure is up from about 100 enrollees late last year. At that time, advocates for the uninsured complained that enrollment was disappointingly low because the plans were expensive and required people to obtain paperwork from insurance companies. And because of insufficient outreach, some people who could afford the coverage and obtain the necessary paperwork did not know the plans existed, they said.

A no-frills health insurance bill

State Senate proposal leaves thorny details for later date

Published 12:01 a.m., Saturday, June 11, 2011

ALBANY — Leaders of the state Senate introduced a no-frills bill on Thursday that would establish the basic structure of a health insurance exchange and leave many of the controversial decisions for a later date.

The tactic may be necessary since the Legislature has only a few session days left to create the exchange in time to qualify for large federal grants.

“It recognizes that there are contentious policy and political decisions to be made about the exchange, but the key thing is to get the exchange up and running to begin to draw down some federal funds,” said Paul Howard, director of the Center for Medical Progress at the Manhattan Institute, a conservative think tank.

The exchange will be a marketplace for individuals and employees of small businesses to find a plan as part of the federal health overhaul plan passed by Congress last year.

The Senate bill would:

— Establish the New York Health Benefit Exchange as a public authority with an 11-member governing board of directors.

— Establish regional advisory committees to provide recommendations.

— Prevent general fund money from being used to finance the exchange.

— Prohibit the exchange from creating new regulations.

— Require the exchange to study various policy issues and submit a report to the Legislature by December 31, 2011.

The bill leaves regulation of the insurance plans to the state Insurance Department and Department of Health.

“We don’t have an overlap of functions here,” said Sen. Kemp Hannon, R-Long Island, who co-sponsored the bill.

With the right elements of transparency and quality indicators built into the exchange so consumers can easily compare plans, Howard said a “clearinghouse-style” exchange would be good for consumers.

“I don’t think you need additional regulatory powers in an exchange to have it work effectively,” he said.

By making it a public authority, Hannon said the new entity would be subject to the accountability and conflict of interest rules of the Public Authority Reform Act.

Questions that must be resolved in the future include: will the exchange be an active purchaser of insurance; will public health plans be part of the exchange; and will minimum standards for plans be offered?

An alternate proposal being circulated by Gov. Andrew Cuomo‘s office says the exchange should have regulatory powers, be an active purchaser, integrate public health plans and set minimum standards. But those elements could slow down passage of the bill, which the governor has yet to formally submit to the legislature. The governor’s office did not return requests for comment.

“We have pointed the way,” Hannon said about the Senate bill. “There is a good model to be had here and we are having active discussions.”

Reach Cathleen F. Crowley at 454-5348 or Visit her blog at

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Survey: Rising Health Rates Hit Home

Published 6/8/2011 
Insurance industry employers’ own health coverage costs are about 9.7% higher this year than they were in 2010.Compdata Surveys, Olathe, Kan., a unit of Dolan Technologies Corp., has based that figure on results from a survey of 210 insurance companies, insurance brokerage firms and other insurance industry employers at about 1,750 locations.

Compdata asked survey participants about pay levels and benefits packages.

About 70% of the participating companies said they pay more than $9,600 per year for coverage for an employer who opts for family coverage.

The annual cost of the typical employee-only plan ranges from $2,400 to $7,200.

Some health insurers have promoted the use of high-deductible health plans, with or without a health savings account or other personal health account, as a strategy for reducing premium costs.

About 67% of the companies Compdata surveyed said they have tried to manage costs by increasing the employee portion of the premium, and 46% said they have increased deductible levels.

About 42% now offer some kind of high-deductible health plan, up from 29% in 2009, Compdata says.

About 83% offered preferred provider organization plans; just 25% offer health maintenance organization plans.

Earlier, Compdata reported that insurance industry employers have increased pay an average of about 2.8% this year. The average increase is about the same as in 2010, the company says.

“There appears to be a level of cautious optimism within the industry in regard to the economy,” Amy Kaminski, the company’s marketing director, says in a statement about the survey results.

California Blue Shield Agrees to Net Income Limit

Published 6/8/2011 
Blue Shield of California, a nonprofit health insurer, says it will try to limit its annual net income to 2% of revenue.California Blue Shield, San Francisco, will make that move retroactive to 2010, meaning that the company could send about $180 million to the company’s customers and to California communities, according to California Blue Shield Chairman Bruce Bodaken.

California Blue Shield will give $167 million to fully insured individual and group Compasscustomers and $3 million in the form of grants to nonprofit health care organizations.

California Blue Shield also will invest $10 million in California hospitals and physician groups, the company says.

The average individual customer will get a credit of about $80, and the average small group will get about $125 for one employee and about $340 for a family of four, the company says.

Bodaken spoke as activists in many states are using large health insurers’ healthy margins as a reason to oppose changes in efforts to implement the Patient Protection and Affordable Care Act of 2010 (PPACA).

A PPACA minimum medical loss ratio (MLR) requires carriers to spend 85% of large group revenue and 80% of individual and small group revenue on health care or quality improvement efforts.

Another PPACA provision will require regulators to review any efforts to increase health coverage rates more than 10%.

California Blue Shield has been a strong supporter of efforts to expand access to health coverage and to make PPACA worth, rather than efforts to block implementation of the legislation.

“We know now that expanding access to coverage is not enough,” Bodaken said during a speech earlier this week in San Francisco, according to a copy of his remarks provided by California Blue Shield. “Even

with the passage of federal health reform, coverage will be denied to far too many. Only if we solve the seemingly intractable problem of rising health care costs will the dream of universal coverage truly be achieved…. Our pledge today tangibly demonstrates that Blue Shield puts affordability before profit.”

California Blue Shield hopes other carriers will follow its example, Bodaken said.

California Blue Shield will stick with the 2% pledge “as long as the company’s board of directors determines that Blue Shield remains financially solvent, with sufficient funds to make the investments needed to stay competitive,” the company says.

California Blue Shield is separate from the company that holds the Blue Cross license for California. It provides or administers health coverage for about 3.3 million people.

U.S. Health and Human Services Secretary Kathleen Sebelius welcomed California Blue Shield’s voluntary 2% profit cap pledge but argued that the kinds of rigorous state reviews of insurance rate increases required by PPACA are also important.

Congress proposes to limit 401(k) leakage

The Rosenbaum Law Firm, Garden City, NY

A few months back, I wrote an article about some 401(k) provisions are bad ideas and quite a few of them were about some loan and hardship features that were burdensome to plan sponsors and could cause many errors in plan administration which puts the plan at risk for being out of compliance.

While I understand the needs for loans and hardship distributions (especially in today’s environment), I think having unlimited amount of loans or having loan repayments besides by payroll could lead to plan errors.

There was legislation proposed last month in the United States Senate called The Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011, or SEAL Act. The legislation gives some relief to participants and former plan participants with hardships and outstanding loans, but tries to minimize leakage of assets because of them. Even better, the legislation does not put any additional administrative burden on plan sponsors.

Some of the legislation’s features:

The bill would allow participants more time to repay loans if they lose their job. Currently repayment must occur within 60 or 90 days, or termination of employment, depending on the plan. The new law would extend that repayment period until tax filing deadline — April 15 of the next year. Workers would deposit the money into a qualified individual retirement account, so it would decrease the amount of defaults and not force 401(k) plan sponsors to do anything

The bill would allow a plan participant taking a hardship withdrawal to continue making contributions. Currently, a participant taking a hardship distribution cannot continue to contribute 401(k) deferrals for at least six months.  I understood the reasoning behind the six month kick-out used to be 12 months prior to 2002) because hardship distributions are as a result of a heavy financial need and how is it immediate if you can afford to defer immediately after getting a distribution? However, if the participants can resolve the financial emergency more quickly, this six month suspension only prevents the account from growing as a result of the participant’s contribution and the employer match. With a retirement crisis in this country, we want participants to save more for retirement and this provision will help do that.

The bill restricts the number of loans a participant can have outstanding at one time to three. More outstanding loans will increase leakage and help cause administrative errors. Limiting loans is a great idea and I suggested that in my article.

The bill bans the use of debit cards tied to a 401(k) account. It’s hard to believe, but some 401(k0 plans have allowed participants to tap into funds by using a debit card. 401(k) plans don’t need the financial equivalent of a payday loan.

Most congressional legislation stinks, the SEAL Act does not. It helps participants and former plan participants avoid leakage to their 401(k) plans. Even better, it does so without putting added burden to plan sponsors and their third party administration firms.

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA. - SIPC - Brokercheck